Stroudsburg schools' solar deal not all it's cracked up to be

Superintendent declares energy project dead

Stroudsburg Area School District officials will not move forward with a massive 48,000-panel, 11-megawatt solar farm they once touted as being one of the largest solar projects for a school district in northeastern Pennsylvania.

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By CHRISTINA TATU

poconorecord.com

By CHRISTINA TATU

Posted Nov. 27, 2012 at 12:01 AM

By CHRISTINA TATU
Posted Nov. 27, 2012 at 12:01 AM

STRUGGLE TOWARD SOLAR POWER

Nov. 17, 2010: Stroudsburg School Board approves a 20-year power purchase agreement with Energy in the Bank. The agreement includes plans to eventually install a 2-megawatt solar farm for Hamilton ...

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STRUGGLE TOWARD SOLAR POWER

Nov. 17, 2010: Stroudsburg School Board approves a 20-year power purchase agreement with Energy in the Bank. The agreement includes plans to eventually install a 2-megawatt solar farm for Hamilton Elementary School, to be approved at a later date. Energy in the Bank CEO Herbert Ortiz also announces plans to make a $300,000 donation to the district once the project is completed.

Dec. 2, 2010: Stroudsburg School Board officials vote against using district-owned property next to the Hamilton school for an 8,000-panel, 2-megawatt, ground-mounted solar project. According to the defeated lease agreement, Energy in the Bank would have paid the district $79,200 per year to lease the property.

Dec. 5, 2010: Stroudsburg School Board members are presented with a scaled-down version of the proposed Hamilton project. It would be about half the original size, using five acres to install a 1-megawatt, 4,800-panel solar farm.

Jan. 6, 2011: Energy in the Bank writes to the school board, withdrawing its proposal to lease land and build solar panels adjacent to Hamilton Elementary. It is still moving ahead with a Chipperfield Drive project, however.

Jan. 7, 2011: School board officials are surprised by a clause in the contract that may hold the district responsible for the cost of the $48 million system if they back out of the agreement.

Jan. 21, 2011: The solar farm, touted as saving the district $18 million, would actually save less than half that amount, according to an analysis by School Business Manager Don Jennings. The actual savings would be more on the order of $5 million to $6 million over 20 years.

Oct. 21, 2011: Stroud Township introduces an ordinance defining several areas where a solar electric facility could be constructed, including the Chipperfield Drive property.

Nov. 4, 2011: School board votes 5-1 to extend the contract with Energy in the Bank by one year, until December 2012.

November 2012: District Superintendent John Toleno declares project dead.

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Stroudsburg Area School District officials will not move forward with a massive 48,000-panel, 11-megawatt solar farm they once touted as being one of the largest solar projects for a school district in northeastern Pennsylvania.

Officials approved the project in November 2010, agreeing to a 20-year power purchase agreement with Marshalls Creek-based Energy in the Bank.

Under the proposal, an outside investor would own the solar system and school officials would purchase at a discount rate the power produced.

The school district would not be responsible for the solar panels or their maintenance.

Energy in the Bank faced numerous stumbling blocks in getting the project started, however, even prompting it to request a deadline extension from the school district.

The school board approved the one-year extension in November 2011, setting Dec. 31, 2012, as the deadline for the system to be installed on a privately owned 62-acre parcel off Chipperfield Drive.

But shovels never hit the ground.

"As far as Energy in the Bank is concerned, we are done with them. Clearly, there has been enough time for them to do what they said they were going to do, so I am moving on," said Superintendent John Toleno.

It's been about three months since the school district last corresponded with Energy in the Bank CEO Herbert Ortiz, Toleno said.

At that time, Toleno told the company that the school district would not be moving forward with the project.

"I told them that we are not doing this anymore. I'm not going to be just strung along," he said.

Ortiz did not immediately return phone calls for comment.

Stroud Township officials also have not heard from Energy in the Bank, which would have needed township approval to install the solar system on Chipperfield Drive.

The property, owned by Glenn Detrick, was zoned residential when the project was first proposed. At that time, solar electric facilities were only allowed in the township's industrial zone.

Township officials have since adopted an ordinance defining several areas where solar electric could be constructed, including the 62-acre Chipperfield parcel.

Energy in the Bank representatives attended the Feb. 23 meeting where township officials adopted that ordinance, but did not speak about the solar project at that time, said township Supervisor Daryl Eppley.

"I think the tax credits were a major issue. Developers represented that the tax credits were 'devaluing,' but I don't know whether that had any effect on this project," Eppley said.

A significant increase in the number of solar projects in recent years is driving down the value of government-issued credits and incentives that are available.

"If you are a homeowner or big company and you are generating solar electricity, then you earn a certificate for every 1,000 kilowatts you produce. That's a renewable energy credit," said Vera Cole, president of the Mid-Atlantic Renewable Energy Association and lead faculty for Penn State's energy and sustainability policy program.

In a November 2011 interview, Ortiz cited the declining value of the renewable energy credits and the acquisition of the Chipperfield Drive property as hurdles in getting the project started.

At that time, about 60 percent of the project was to be financed by renewable energy credits provided by the U.S. Environmental Protection Agency.

Investors were originally going to lease the Chipperfield site for $6,000 per acre annually, but could no longer afford the price because of the decreased value of the credits, Ortiz had said.

When the solar project was proposed in November 2010, the credits were worth $300 per 1,000 kilowatts of power produced. By November 2011, the rate had dropped to around $45 per 1,000 kilowatts.

In November 2011, Ortiz said the company was negotiating with Detrick to purchase the property. According to county tax records, as of Nov. 15, Detrick still owns the Chipperfield site.

Detrick did not immediately return calls for comment.

According to Energy in the Bank's website, the company has installed solar projects on eight residential properties.

One of those cited is in Sciota and owned by the Jakobsen family, although the website did not specify if it is owned by school board member John Jakobsen, who spearheaded Stroudsburg's venture into solar energy and facilitated the district's communications with Energy in the Bank.

Jakobsen did not immediately return phone calls.

Solar projects have also been installed at Sarah Street Grill and Phillips Street Apartments, both in Stroudsburg, according to the company.

Projects are "under development" with the Elm Street Apartments in Stroudsburg and Lincoln Plaza in East Stroudsburg, the website said. The company is also pursuing numerous projects outside the area.

One of those is with Bangor Area School District, where Energy in the Bank proposed a similar deal to the one offered to Stroudsburg Area School District — though on a smaller scale.

That project would involve a combination of roof- and ground-mounted panels, stretching across 16 acres and generating 4.7 megawatts of electricity.

"What's happened is the subsidies have gone away, so they can't offer the same competitive rates," said Bangor Area School Board member Kevin Pruett. "The economics of it aren't compelling right now, and I think all of these solar project folks have difficulties coming up with cost-effective, competitive projects."

The school board has continued to work with Energy in the Bank since February, when the company first approached them.

"They just haven't been able to put together a package that is attractive to us," Pruett said.

Solar electricity rates have dropped to the point that they are on par with electricity from the grid, he said.

Solar panel systems may still make sense for small-business owners and private property owners who buy their own systems, Cole said.

But for nonprofit organizations, "it's hard getting the pricing and business model just right," she said.

"The main differences are residential and small businesses qualify for a lot of incentives "» but nonprofits like schools and churches don't qualify for the same incentives, which is why the third-party businesses often end up in that role."

Many school districts, including Stroudsburg, have been purchasing electricity through a regional consortium with other school districts.

"It's typically a two-year-block that you lock up for. It's like wholesaling electricity," Pruett said. "The question is, what is the rate going to be five years from now, 10 years from now, or even 25 years from now? Right now (electricity) is coming from finite resources. Natural gas is at unsustainably low prices right now, and it can't stay that way."

About six to eight months ago, Toleno said he was approached by a local businessperson with ties to another solar company, though he declined to release either name.

Stroudsburg will continue to examine the viability of renewable energy sources, but there are no plans to move forward with another project at this time.

The deal proposed by the new company is similar to the one proposed by Energy in the Bank, in which Stroudsburg would enter into an agreement to purchase the power but would not own any of the infrastructure.

"I haven't brought anything to the board with it because at this point, it's very preliminary," Toleno said.